PE market maintains the downward trend in the short-term

After May Day holiday, China domestic polyethylene market is sluggish, and market price of each products shows a huge decline. LLDPE futures moves lower continuously, and the overall price level basically returns to the level at the beginning of 2021, which greatly suppresses the spot market mindset. Traders have to offer lower, and downstream buying interest weakens. Most of them purchase to cover their rigid demand. Although LLDPE futures rebounds slightly recently, it is still in a volatile trend. Market mindset is bearish, waiting for the market to recover and rebound.

From the perspective of supply, plants shut for maintenance during the spring turnaround season have restarted gradually. Also, new plants have been put into production successfully, and there are still plants planned to be put into production in June, and the short-term supply is in an incremental trend.

From the perspective of demand, although the current spot price is relatively low in the short-term, downstream buying intention is weak, and the end-users mainly purchase at need-to-basis. The weather is getting hotter, and market players are worried about whether the government will continue to introduce power restriction policies. Some downstream plants are in a state of shutdown, and the operating rate is relatively low. The agricultural mulching film is in the off-season of production and marketing, so demand continues to be weak.

From the perspective of imports, the import volume of PE in April is lower than that in the previous month, which is on the low side. Although the overseas market price is still higher than China domestic market, market price moves lower and RMB appreciates. With the further control of the pandemic and the end of the turnaround of foreign plants, imports are expected to increase in Jun. Currently, the port inventory is relatively high, and imports may increase, the import market supply will be at a higher level, which will further suppress the upward potential of China domestic PE products.

From the perspective of crude oil, international oil prices are currently at a high level, and due to the impact of demand recovery and inflation expectations, it still shows a rising trend in the long run, and processing profits are further compressed.

Generally speaking, PE market is relatively poor at present, and may continue to move lower in the future. Traders are suggested to be concerned about the impact of plant production and pandemic recovery on the market. At the same time, downstream inventory is relatively low at present, if demand recovers and macro environment improves, PE market may rebound.